The 2018 Proposed Federal Budget and the American Jewish Economy

What will be the likely impact on the Jewish community of the proposed 2018 Federal Budget, officially known as the “America First: A Budget Blueprint To Make America Great Again“?

Budgets, we are told, reflect the values and priorities of its architects. The America First Budget reflects a fundamental reconstruction of this nation’s economic, cultural and political priorities. What are the implications of these financial proposals for America’s Jews, our communal institutions, and the broader American social order?

Specific Communal Impact:

If we assume that the American Jewish economy represents a $26 billion investment, making it a collective powerhouse of resources, programs, and services essential to this nation’s social service delivery system. It has come to represent a major philanthropic engine within the nonprofit sector.

In preparing this story, this writer conferred with JFNA’s Senior Vice President for Public Policy and Director of its Washington office, William Daroff, who offered this financial assessment:

“We estimate that federation-affiliated agencies receive over $10 billion per year. The vast majority are funds from Medicaid and Medicare to Jewish hospitals, nursing homes, and family service agencies.”

Daroff would offer a further clarification of these numbers with the following observation:

“Our data is somewhat dated, and is a guesstimate of sorts based on a non-academically-rigorous survey about a decade ago. But, we have no reason to believe that, in general terms, it is still accurate. We are in the process now of surveying federations and federation-affiliated agencies to update the data so that we can ascertain with more certainty the full extent of governmental funds received by the federation movement.”

Philosophical Issues:

Over a half century ago, the Jewish community would debate the merits of accepting federal grants. Would such support undermine the “Jewish” character of our social service institutions? Outside of the impact of the Great Depression of the 1930’s, when Jewish social services did accept government support, the community would maintain its historic position, as represented by the “Stuyvesant Doctrine.” Based on the Dutch West India Company’s instructions to Governor Peter Stuyvesant in 1655 that the arriving Jewish settlers could remain in the Dutch colony of New Amsterdam as long as they were prepared to “care for their own.”

In the post-Second World War era, an alternative argument would be put forth suggesting that our religious tradition compelled Jews to be responsive to the broader human needs and social concerns within our society. Realistically, many of the community’s basic services could not sustain themselves without accepting governmental assistance.

…The Jewish community worried that accepting federal money would ruin the Jewish character of charitable institutions. However, the leaders of the day figured that more money meant a broader clientele, which meant more Jews.

“The organization noted a proposed 13.2 percent cut to the Housing Department, which would adversely affect the 38 buildings with 8,000 residents in the B’nai B’rith network.”

Historical Context:

A 2002 JTA (Jewish Telegraphic Agency) story would note the fiscal impact of proposed budget cuts during the Bush Administration:

“S.F.-based JFCS receives only about 3 percent of its budget from federal and state sources – but that still translates to nearly $1 million a year. San Francisco’s Jewish Vocational Service gets $2.3 million of its $5.5 million overall budget from the federal, state and local governments, utilizing much of it for émigré programs.”

Indeed, under the administration of President George W. Bush (2001-2008) there was particular attention given to the support of “faith-based” systems of social service. “The president’s plan opened up the possibility of federal dollars flowing directly to a synagogue, church or other overtly religious institution, a break from the past.”

Overview of the 2018 Budget Proposals:

Some of the areas of proposed federal reductions and adjustments include the following:

Agriculture: Proposed cuts will amount to 21% of discretionary budget items, including the elimination of the McGovern-Dole International Food Program, reductions in the nutrition assistance programs of some $200 million, and nearly $100 million in rural business and cooperative services programs.

Commerce: Among the proposals will be the reduction of $250 million for the coastal research program along with the closing of the Economic Development Administration.

Defense: The Trump Administration is proposing significant increases in defense expenditures that will include the addition of new fighter-bombers, ships, and military personnel.

Education: The Administration is proposing the reduction of $3.7 billion in grants for teacher training, after-school and summer programs, and aid programs to first-generation and low-income students. Other proposals call for the reduction in federal work-study aid to college students, increased support for charter school funding ($168 million), the creation of a new private-school choice program with a grant of $250 million, and a $1 billion investment for low-income students permitting them to pursue schools of their choice.

Energy: In addition to $900 million in cuts to the Office of Science, the Administration is seeking to eliminate Energy Star, the Weatherization Assistance Program, Advanced Technology Vehicle Manufacturing Program, and Title 17 loan guarantees.

HUD: The President is requesting a reduction of $3 billion in Community Development Block Grants, the elimination of the HOME Investment Partnerships Program and similar Federally sponsored projects. The budget proposals call for a reduction of Section 4 Community Development and Affordable Housing Programs by $35 million.

Interior: The Department is scheduled to face a 21% budgetary reduction, with 49 National Heritage Areas to be eliminated and the decrease in land acquision funding by $120 million.

Justice: The budget calls for an $80 million increase in order to engage attorneys to handle “immigrant removal” cases.

Labor: In addition to cuts to International Food for Education Program and the elimination of the Water and Wastewater Loan and Grant Program, the budgetary proposals call for a reduction of the Women, Infants and Children nutrition assistance from $6.4 billion to $6.2 billion.

State: A 28% reduction in overall program grants, including the elimination of the climate-change prevention programs, a reduction in support of UN peacekeeping operations and for the World Bank and other development initiatives, and the downsizing of most cultural-exchange programs.

Broader Implications:

Federal budgetary cuts are also targeted to include various cultural, educational programs. Some Jewish agencies that are eligible to receive federal monies in these areas, including after-school enrichment programs, film festivals, arts education, etc., may experience reductions or the termination of such grants.

Jewish cultural organizations throughout the country would be severely, negatively impacted by the elimination of the NEH, IMLS, and NEA. These agencies fund every pocket of America, including grants to the Atlanta Jewish Film Festival (GA), the Contemporary Jewish Museum of San Francisco (CA), Folksbiene Yiddish Theatre (NY), the Jewish Community Housing for the Elderly (MA), the Jewish Arts Foundation of Palm Beach (FL), Maine Jewish Film Festival (ME), the Oklahoma Israel Exchange (OK), RUACH (WI), Spertus Institute of Jewish Studies (IL), Jewish Community Center of Washington, DC., the Irene Kaufmann Center/JCC in Pittsburgh (PA). Truly, the list is endless.

In response to the potential budgetary reductions, are we likely to see an upsurge in Jewish donor support seeking to offset some of these losses?

…The NEA and NEH allocate large percentages of their budgets to all of the states and territories in the country, distributed through more than 24,000 grants just in the last year. The loss of both federal and state funding will have a devastating impact on the more than 100,000 arts and cultural organizations that depend on these funds to support their services to the public, and that use government funding to leverage matching funds from the private sector.

As Jews are major supporters of their local theatre companies, art museums, symphony orchestras, and public broadcasting stations, many of which are likely to be impacted by various budgetary changes, is it likely that we will see Jews “stepping up” to increase their support of these cultural and educational institutions?

The budgetary cuts will also impact United States foreign policy interests, as the State Department financial capacity to provide foreign aid and underwrite other grant programs are likely to be reduced or eliminated; these resources have been central to strengthening US influence in various regions. Israel policy makers and Jewish leaders have expressed concerns in connection with these proposed reductions as problematic to long-term American and Israeli interests within the Middle East and Africa.

“The proposed draconian cuts in areas vital to executing U.S. foreign policy could adversely affect our national security interests by potentially creating more pressure on the American military while essential diplomacy is being undermined,” David Harris, the AJC CEO, said in a statement. “Deep cuts to the State Department, including in key educational and cultural exchange programs, will severely harm America’s ability to assert our interests and values abroad.”

Reflections on Federal Budgetary Cuts:

The notion, for example, that philanthropic support for the arts can offset the loss of government grants appears not to be realistic. Similarly, the downsizing of federal assistance would have broader implications:

Foundation support for the arts was only 5% of total contributions in 2015, according to Giving USA, the annual report on philanthropy. Yet, the impact of the arts is rich beyond economics. The arts inspire creative thought and innovation; they share our rich history as a nation and a people; they tell our individual stories to bridge understanding of our differences and celebration of our similarities, dispelling stereotypes and bridging divides. The arts bring joy and passion into our lives, challenge us to think about national and global social issues, challenge the status quo, and, challenge us to think differently.

Summarizing the overall impact of such proposed cuts, the Reform Movement’s Religious Action Center offered the following assessment:

The budget’s “drastic reduction in funding for critical human needs, environmental protection and international aid programs abdicate the federal government’s responsibility to the American people it serves and others worldwide who depend on U.S. leadership.”

No doubt, the interplay between the Jewish community and the Federal government has expanded over time, making agencies and programs of our communal institutions increasingly dependent on federal and state resources to underwrite and support these key safety net activities. Similarly, the cultural and educational connections between public arts funding and the institutions of the Jewish community have likewise expanded over time. In the wake of these proposals, some of these key resources and partnerships will no longer be available.

Yet, it should be noted that day schools and other Jewishly sponsored educational programs may be actual beneficiaries of the Trump proposals, with its specific focus on school choice and private educational initiatives.

Certainly, the international interests of the Jewish people and more directly, the State of Israel, has placed greater value on America’s role in influencing and shaping global ideas, culture, and attitudes. The decline in US investment will have an impact on advancing our nation’s presence within the world around such issues as strengthening democracies, promoting religious tolerance, and advancing initiatives on behalf of women and children, etc.…

In the past when facing such financial challenges, four characteristics have defined the behavior of the nonprofit sector:

The downsizing of personnel and programs reflects the primary or “first-stage” strategy.

Adversely affected agencies have absorbed some of these cutbacks and reductions through mergers and acquisions as institutions have sought out partners and competitors to manage the fiscal fall-out that has resulted.

Galvanizing donor support in some instances has permitted key social service and creative arts organizations to “weather” the storm when encountering such government cutbacks.

Confronting such budgetary situations, certain institutions have opted to close their doors. While this option is seen as the “last stance,” in some settings it may represent the only viable pathway.

Steven Windmueller, Ph.D. on behalf of the Wind Group, Consulting for the Jewish Future.

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